Tata Motors also warned that the Jaguar Land Rover (JLR) unit, which brings in most of its revenue, would swing to an operating loss in the year to March versus an earlier projection for breakeven, given weak sales at the luxury British carmaker.

JLR’s China retail sales almost halved in the December quarter as overall demand in the world’s biggest auto market contracted last year for the first time since the 1990s. The firm has also been buffeted by Brexit woes and weaker business for diesel cars that account for bulk of its sales in Europe.

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Tata Motors turned in a third-quarter loss of 269.93 billion rupees ($3.8 billion) on Thursday, more than half its current market capitalisation of $6.1 billion, mostly due to a massive impairment at JLR. Analysts were expecting a profit.

“We are now taking clear and decisive actions in JLR to step up its competitiveness, reduce costs and improve cash flows and make the business fit for the future,” Chief Financial Officer PB Balaji told reporters on a conference call on Thursday.

JLR has taken steps to address the slide in China sales by changing its strategy to focus on profits for dealers instead of sales and incentivising retail sales over wholesale, he said.

FILE PHOTO – A Tata Tigor car is pictured at the assembly line inside the Tata Motors car plant in Sanand, on the outskirts of Ahmedabad, India, August 7, 2018. REUTERS/Amit Dave

“We are encouraged by continued demand for the refreshed Range Rover and Range Rover Sport,” JLR Chief Commercial Officer Felix Brautigam said in a statement.

“With deliveries of the new Evoque due to start later this quarter, we look forward to building momentum.”

But analysts expect JLR to struggle to generate profit with China’s economy projected to slow further this year after growth eased to its weakest pace in almost three decades in 2018.

Tata Motors took a non-cash charge of 278.38 billion rupees for an impairment at JLR in the quarter. Changes in market conditions, especially in China, technology disruptions and rising cost of debt led to the charge.

JLR, Britain’s biggest carmaker, also faces disruption due to persistent uncertainty over a Brexit deal and has decided to halt production for a couple of weeks in April.

British Prime Minister Theresa May’s Brexit deal was rejected in parliament last month and the government is trying to make changes to win the support of lawmakers even as the date for Britain’s departure from the European Union looms less than two months away.